Hong Kong-listed airline stocks have extended their losses.

As of writing, shares of China Southern Airlines Co Ltd (HKG: 01055) fell 4.7% to HK$3.65. China Eastern Airlines Corporation Limited (HKG: 00670) dropped 4.4% to HK$3.48. Air China Limited (HKG: 00753) declined 4.06% to HK$4.49. Cathay Pacific Airways Limited (HKG: 00293) decreased by 1.07% to HK$11.97.

Recent data shows that in May, domestic route capacity deployment for listed airlines fell by approximately 6.2% year-on-year and 2.2% month-on-month.

Analysts at Dongxing Securities noted that the high oil price environment is expected to continue suppressing capacity deployment in June. Although international oil prices have recently retreated, there is typically a one-month lag before these changes affect domestic jet fuel prices in China. Consequently, domestic aviation kerosene ex-factory prices are projected to remain elevated in June, maintaining high cost pressures for airlines. However, some relief is anticipated in July.

Analysts from UBS added that while Chinese airline stocks have been under pressure and performed weakly over the past few months due to rising oil prices, the market has largely priced in these negative factors, suggesting limited downside from current levels. With potential future reductions in fuel surcharges potentially stimulating demand, the firm expects Chinese airlines to achieve sequential quarterly improvements, with year-on-year comparisons for quarterly profits also expected to turn positive.